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How much difference will Eli Lilly’s half-price insulin make?


 

A different kind of generic

One twist in this story is that Lilly’s new insulin is just a repackaged version of Humalog, minus the brand name. It’s called an “authorized generic.”

“Whoever came up with the term ‘authorized generic’?” Dr. Vincent Rajkumar said, laughing. Rajkumar is a hematologist at the Mayo Clinic in Rochester, Minn.

“It’s the same exact drug” as the brand name, he continued.

Typically, Rajkumar said, authorized generics are introduced by brand-name drugmakers to compete with generic versions of their drugs made by rival companies.

But in the case of Humalog and other insulins, there are no generics made by competitors, as there are for, say, the cholesterol medicine Lipitor or even other diabetes drugs, such as metformin.

So when Lilly’s authorized generic comes to market, the company will have both Humalog insulin and the authorized generic version of that medicine on the market.

Rajkumar said it’s a public relations move.

“There’s outrage over the price of insulin that is being discussed in Congress and elsewhere. And so the company basically says, ‘Hey, we will make the identical product available at half price.’ On the surface that sounds great,” Rajkumar said.

“But you look at the problems and you think, ‘OK, how crazy is this that someone is actually going to be buying the brand-name drug?’ ”

In fact, it’s possible that Lilly could break even or profit off its authorized generic compared to the name-brand Humalog, according to University of Pittsburgh’s Hernandez.

The profit margin would depend on the rebates paid by the company to insurers and pharmacy benefit managers. Rebates are getting a lot of attention these days as one factor that pushes drug prices higher. They’re usually not disclosed and increase as a drug’s price increases, providing an incentive to some companies to raise prices.

“Doing an authorized generic is nothing else than giving insurers two options,” Hernandez said: Pay the full list price for a brand-name drug and receive a higher rebate, or pay the lower price for the authorized generic and receive a presumably smaller rebate.

“What we really need to get insulin prices down is to get generics into the market, and we need more than one,” Hernandez said, adding that previous research has shown that prices begin to go down when two or three generics are competing in the marketplace.

Even so, Lillly’s Kueterman said the authorized generic insulin “is going to help hopefully move the system toward a more sustainable model.”

“I can guarantee you the reason that we’re doing this is to help people,” Kueterman said, noting the company’s Diabetes Solution Center has also helped “10,000 people each month pay significantly less for their insulin” since it opened in August.

For Erin Gilmer, the news about an authorized generic insulin from Lilly has left her mildly encouraged.

“It sounds really good, and it will help some people, which is great,” Gilmer said. “It’s Eli Lilly and pharma starting to understand that grassroots activism has to be taken seriously, and we are at a tipping point.”

This story is part of a partnership that includes NPR and Kaiser Health News. Kaiser Health News is a nonprofit national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation that is not affiliated with Kaiser Permanente.

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